The purpose of this study is to determine if depletion of hepatic iron stores results in an improved response in patients with chronic hepatitis C. It is a multicenter study involving ten centers. 130 patients will be enrolled (approximately 15 at this site) who have failed to respond to interferon alpha given in usual dosages for treatment of chronic hepatitis C over the past two years. Patients will undergo a percutaneous liver biopsy. Following determination of hepatic iron concentration, patients will be randomized to either phlebotomy to produce asymptomatic iron deficiency or to phlebotomy plus retreatment with interferon-alpha. Once iron deficiency has been achieved, one-half of the patients will be treated with interferon-alpha for 6 months. Iron deficiency will be maintained during the period of treatment with interferon-alpha by additional phlebotomy every other month for both groups. A second liver biopsy will be performed at the end of interferon-alpha therapy to determine if hisotologic improvement has occurred. The variables to be investigated are the hepatic iron concentration, the total iron burden measured by quantitative phlebotomy, and the response to interfereon-alpha following iron depletion therapy identified by biochemical, histological, and virological response. This study is very important because it is estimated that up to 1% of the U.S. population has been infected with hepatitis C and treatments to date have failed to cure the disease in the majority of treated patients. Patients with chronic hepatitis C treated with interferon-alpha exhibit a long-term response rate of 25%. In the future, all patients with hepatitis C may initially undergo phlebotomy prior to treatment with interferon, to enhance response to this expensive, and toxic therapy.